Correlation Between Zegona Communications and Induction Healthcare
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and Induction Healthcare at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zegona Communications and Induction Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Induction Healthcare Group, you can compare the effects of market volatilities on Zegona Communications and Induction Healthcare and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zegona Communications with a short position of Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Induction Healthcare.
Diversification Opportunities for Zegona Communications and Induction Healthcare
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zegona and Induction is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare and Zegona Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zegona Communications Plc are associated (or correlated) with Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Zegona Communications i.e., Zegona Communications and Induction Healthcare go up and down completely randomly.
Pair Corralation between Zegona Communications and Induction Healthcare
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 4.21 times more return on investment than Induction Healthcare. However, Zegona Communications is 4.21 times more volatile than Induction Healthcare Group. It trades about 0.05 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.03 per unit of risk. If you would invest 7,750 in Zegona Communications Plc on August 31, 2024 and sell it today you would earn a total of 27,450 from holding Zegona Communications Plc or generate 354.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.5% |
| Values | Daily Returns |
Zegona Communications Plc vs. Induction Healthcare Group
Performance |
| Timeline |
| Zegona Communications Plc |
| Induction Healthcare |
Zegona Communications and Induction Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and Induction Healthcare
The main advantage of trading using opposite Zegona Communications and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, Induction Healthcare can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.| Zegona Communications vs. Toyota Motor Corp | Zegona Communications vs. SoftBank Group Corp | Zegona Communications vs. OTP Bank Nyrt | Zegona Communications vs. Las Vegas Sands |
| Induction Healthcare vs. Sydbank | Induction Healthcare vs. Auto Trader Group | Induction Healthcare vs. Cincinnati Financial Corp | Induction Healthcare vs. Synchrony Financial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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